Markets to make a flat-to-cautious start on mixed global cues

The Indian markets gradually losing their hold ended with cut of around half a percent in last session. Today, the start is likely to be flat-to-cautious, as there will be some concern with the current account deficit soaring to $ 3.4 billion, or 0.6 per cent of gross domestic product (GDP), in the fourth quarter of fiscal 2017, from $ 0.3 billion a year ago. The widening of the CAD on a year-on-year basis was primarily on account of a higher trade deficit which stood at $ 29.7 billion. However, on a sequential basis, the gap between forex earnings and expenses, narrowed from $ 8 billion in the third quarter of FY17. There will be some buzz in the chemical sector stocks, as the Finance Ministry has imposed definitive anti-dumping duty on Hydrogen Peroxide imports from six countries. The IT and tech  stocks are likely to remain under pressure tailing the slump in global counterparts and as the board of directors at Infosys will set revised growth targets in place of the much-touted goal of $20 billion by 2020. The oil companies too will be in focus, as after the successful pilot in five cities, state-owned oil companies will from today revise rates on a daily basis across all the 58,000 petrol pumps in the country. Also, Reliance Industries and British Petroleum have announced an investment of $6 billion, or nearly Rs 40,000 crore, in new projects including developing new gas fields in the KG-D6 block.

The US markets despite coming off the worst levels of the day, ended modestly in red in the last session, as traders continued to digest the Federal Reserve's decision to raise interest rates by a quarter point and they largely overlooked the report showing a bigger than expected drop in initial jobless claims in the week ended June 10th. The Asian markets have made a mixed start, though some of the indices are up by around half a percent in the early deals, led by the Japanese market ahead of a Bank of Japan's policy decision.

Back home, the Penultimate trading day of the week turned out to be a disappointment for the Indian frontline equity indices, as they remained choppy throughout the session and ended near day’s lows. The benchmarks suffered hefty bouts of profit booking especially in Oil & Gas, PSU and IT counters and got dragged below the psychological 9,600 (Nifty) and 31,100 (Sensex) levels.  Sentiments remained weak with the report that the likely increase in farm loan waivers will weigh on PSU banks, NBFCs. The agri stress indicates that Tamil Nadu, Karnataka and Haryana may follow up with farm loan waivers, taking the total farm loan waivers to about $28 billion from $10 billion. Besides, soft US economic data, a relatively hawkish Federal Reserve statement and worries of political turmoil in the world's largest economy also weighed on the sentiments.  Adding pessimism among traders, Moody’s Investors Services in its report indicated that Reserve Bank of India’s (RBI’s) move to reduce the amount of money that banks have to set aside (as security) on home loans is negative from the perspective of the ratings of lenders. According to the rating agency, the move is credit negative for Indian banks because lower capital requirements will weaken their protection related to the exposure to the housing sector and encourage greater lending. Some concerns also came with report that foreign portfolio investors (FPIs) sold shares worth a net Rs 161.13 crore on June 14, 2017. Meanwhile, with less than two weeks to go, the Centre and States are hoping to wrap up discussions on the goods and services tax (GST) this weekend. The GST Council will meet on June 18 to finalize the tax rate on lottery and will discuss the remaining draft rules. Finally, the BSE Sensex declined 80.18 points or 0.26% to 31075.73, while the CNX Nifty was down by 40.10 points or 0.42% to 9,578.05.